Make your baby a millionaire

News & comments

22 August 2018

Children born this year could become millionaires by their 43rd birthday if their families contribute to a pension for the first 18 years of their lives, according to figures compiled by Brewin Dolphin.


The wealth manager’s analysis found that parents, or grandparents, contributing £2,880 per year (£3,600 after tax relief) until their children turn 18 years old could create a pot of £1,021,837 by 2061. The figure assumes a total contribution of £51,840, a growth rate of 8% per annum, and is net of product charges.


Whilst the assumed growth rate may seem high, data from Moneyfacts, the comparison website, showed that average returns from pension funds were 10.5% in 2017, and have seen double-digit growth for six consecutive years.


While lower growth rates reduce the return, they would still leave children with a substantial pot of cash to help them retire. Average growth rates of 2% and 5% mean that, by the time the child reaches its 55th birthday (2073), they would have a pot of £171,086 and £668,592 respectively.


On an average 5% growth rate, the child would be a millionaire by the time they retire in 2083 (65 years old), with a pension pot of £1,089,067. By the same milestone, a growth rate of 8% would create a pension pot of £5,555,260.


Previous research from Brewin Dolphin found that very few people would consider contributing to a loved one’s pension – only 2% of over 55s said they would support a relative by putting money into a pension fund1. By contrast, 68% said they would leave their family an estate when they pass away compared with 34% who would help their family with ongoing gifts of any kind.


Douglas Cameron, Divisional Director – Financial Planning at Brewin Dolphin Glasgow, said: “Despite its obvious advantages, contributing to a family member’s pension is one of the last thoughts to cross the majority of people’s minds. Yet, provided growth rates remain at current levels, it could make a millionaire of a child born today by the time they hit middle age from a relatively modest £51,840 over 18 years. It’s the power of compounding interest in action.


“One of the biggest obstacles to passing on wealth tends to be the parents or grandparents worrying that their younger family members will ‘waste’ the money on frivolous purchases. But, pension contributions guarantee that their children won’t be able to use the proceeds until they are pensionable age. 


“If they don’t want to exert that amount of control, they can look at other ways too. Junior ISAs offer tax-free savings until a child is 18; albeit there is no tax relief. However, if they want to be very specific about what their money pays for, discretionary trusts are another option, keeping it vague about who benefits and in what capacity. Still, neither of these options offer the potentially life-changing returns that pension contributions could provide.”




Press contacts


Peter McFarlane


T: 0141 559 5840       



Richard Janes

Brewin Dolphin

T: 020 3201 3343




These figures are for illustration purposes only and you may get more or less than this. This information is not intended as financial advice.

The value of investments can fall and you may get back less than the amount invested.

Any tax allowances or thresholds mentioned are based on personal circumstances and current legislation, which are subject to change.

The information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.

The opinions expressed are not necessarily those of Brewin Dolphin Ltd.


Notes to editors


1Figures taken from Brewin Dolphin’s ‘Mind the generation gap’ research, which included a detailed survey of 11,000 people. For more information please visit: